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POLITICAL ECONOMY. 



BY 

HENRY CARET BAIRD. 

REPRINTED FROM THE AMERICAN CYCLOPEDIA, 



POLITICAL ECONOMY. 



BY 



HENRY CAREY BAIRD. 



IREPRINTED FROM THE AMERICAN CYCLOPEDIA.] 



NEW YORK: D. APPLETON AND COMPAKY, 

1875. 



f 



:.,r 



POLITICAL EOOI^OMY, properly, an ex- 
position of the measures necessary for 
directing the movements of society so that 
man may act in harmony with those natu- 
ral laws which control his efforts to improve 
his condition. Social science treats of the 
laws themselves. Prof. E. Thompson would 
sabstitute for the name political economy 



that of national economy. Great confusion 
exists not only in regard to the definition 
of political economy itself, but as to the 
meaning of the various expressions used in 
treating of the subject, and even as to a 
general understanding of its scope. Some 
writers have treated it as a science, others 
as an art, and Sir James Steuart speaks of 



2 



POLITICAL ECONOMY 



it as a combination of the two. Mr. Senior 
considers it " the science which treats of the 
nature, the production, and the distribution of 
"wealth." Archbishop Whately would give it 
the name of " catallactics, or the science of ex- 
changes." J. R. McCulloch considers it " the 
science of the laws which regulate the produc- 
tion of those material products which have 
exchangeable value, and which are either ne- 
cessary, useful, or agreeable to man." Storch 
says it "is the science of the natural laws 
which determine the prosperity of nations, 
that is to say, their wealth and civilization." 
Sismondi considers "the physical welfare of 
man, so far as it can be the work of govern- 
ment or society as the object of political econ- 
omy." Say defines it as " the economy of so- 
ciety; a science combining the results of our 
observations on the nature and functions of 
the different parts of the social body," John 
Stuart Mill considers it "the science which 
treats of the production and distribution of 
wealth, so far as they depend upon the laws of 
human nature," or "the science relating to the 
moral or psychological laws of the production 
and distribution of wealth." The progress thus 
far made in political economy has been slow 
and uncertain, and in its entire range there is 
hardly a doctrine or even the definition of an 
important word Avhich is accepted beyond dis- 
pute. In 1844 De Quincey acknowledged that 
it did not advance, and that from the year 
1817 it had "on the whole been station- 
ary;" and he adds: "Nothing can be postula- 
ted, nothing can be demonstrated, for anarchy 
even as to the earliest principles is predomi- 
nant." Amid all their discords and disagree- 
ments, it is possible to divide political econo- 
. mists under two general beads: those who 
treat the subject as a deductive science, " in 
which all the general propositions are in the 
strictest sense of the word hypothetical;" and 
those who treat it by the inductive method. 
They may also be divided into those who fol- 
low Ricardo with his fundamental doctrine of 
the theory of rent, and those who have given 
in their adhesion to Carey's law of the occu- 
pation of the earth. The adverse views as to 
the practical effects of the application of pro- 
tection and free trade are quite inadequate to 
ssrve the purpose of division, since many of the 
believers in one or the other of these doctrines 
quite disagree in regard to other and important 
questions. The discordant state of this so- 
called science therefore renders it necessary in 
this place to trace out the history of economic 
ideas, and to give an account of the views and 
opinions at present held by the adverse schools 
and their various teachers. — A science under- 
lying the art of political economy was quite 
unknown to the ancients, although they had 
brought under observation many facts which 
gave rise to true and valuable economic doc- 
trines. These doctrines or rules were how- 
ever quite empirical, isolated, and not elabo- 
rated into bi-oad and far-reaching principles. 



and had in view far more the advancement of 
the state, its treasury, and its military power, 
than the prosperity, the happiness, and the 
freedom of the people. Nevertheless it is im- 
portant to recognize the fact of the origin of 
political economy in these early and imper- 
fectly stated doctrines. The ancient code of 
India, the Institutes of Manu, contains provi- 
sions as to the revenues, usury, &c. ; but these 
provisions are merely designed to establish and 
fix the respective rights and duties of the sov- 
ereign and his subjects, and of the subjects 
among themselves. In Attica agriculture was 
commended and encouraged, and the price of 
agricultural produce was generally low ; while 
the products of various branches of diversified 
industry were important, but the prices were 
generally high. Foreign trade was carried on 
extensively with the various countries on the 
shores of the Mediterranean and Black seas. 
Duties were levied upon foreign imports, but 
almost if not quite wholly with a view to the 
revenue of the state. Interest was high, and 
money was scarce and hard to procure. " In 
every Greek state," says Bockh, "the finances 
were in the hands of the sovereign power ; and 
at Athens the legislation on financial matters 
belonged to the people, the administration of 
them to the supreme council. Then, as well 
as now, the administration of the finances was 
considered one of the most important branch- 
es of the public affairs, and the statesman who, 
like Aristides or Lycurgus, succeeded in pla- 
cing them in a flourishing condition, gained 
the good will of the people and the admira- 
tion of posterity." The laws of Lycurgus deal 
with many economic questions, such as money, 
usury, taxes, lands, and the employment of 
the people ; but almost the sole idea through- 
out these laws is the establishment of the mil- 
itary power of Sparta. " Lycurgus, or the in- 
dividual to whom this system is owing, who- 
ever he was," says Grote, " is the lawgiver of 
a political community ; his brethren live to- 
gether like bees in a hive, with all their feelings 
implicated in the commonwealth, and divorced 
from house and home." The earliest treatise 
on an economic subject is believed to be " The 
Eryxias, or About Wealth," erroneously at- 
tributed to xEschines Socraticus, a disciple of 
Socrates. Plato ("The Republic," book ii.) 
calls attenti(m to the necessity for separate 
employments, and in the opinion of Blanqui 
"he has pointed out the advantages of a di- 
vision of labor with perfect clearness, and 
appears to us to take from Adam Smith the 
merit of this discovery." He also regards the 
passage in which Plato conducts his reader to- 
ward a definition of money by tracing up the 
necessity, in a community of diversified em- 
ployments aad wants, of "an established coin- 
age as a symbol for the puq^oses of exchange," 
as most remarkable, partaking of the nature of 
most ingenious art. On the other hand, in the 
opinion of Say, Plato " has with tolerable fidel- 
ity sketched the effects of the separation of 



POLITICAL ECONOMY 



social employments, but solely with a view to 
point out man's social character, and the ne- 
cessity he was in, from his multifarious wants, 
of uniting in extensive societies, in which each 
individual might be exclusively occupied with 
one species of production. It is an entirely 
political view, from which no other conse- 
quence can be drawn." Xenophon contributed 
two brief essays to early political economy, 
one " On the Revenues of Athens," the other 
" The Economist." The political economy of 
Xenophon, as Blanqui holds, "rests on no 
other foundation than that of Plato. When- 
ever he undertakes to analyze the opera- 
tions of labor, to trace revenue to its source, 
to determine the utility of things, the clear- 
ness of this writer is admirable ; but as soon 
as he touches the question of the distribution 
of profits, the Greek prejudices reassume their 
sway, and the author falls back into the politics 
of Plato and Aristotle, faithful interpreters" 
of the contemporary oligarchy." Carey says : 
" Xenophon urged upon his Athenian country- 
men that, in default of the domestic market for 
food that would have resulted from the prop- 
er development of the mineral treasures with 
which their soil abounded, agriculture had be- 
come impossible ; many having been forced to 
abandon it, becoming usurers or brokers ;" and 
he adds: "This is probably the earliest ex- 
hibit on record of the dependence of agricul- 
ture on the mining and manufacturing indus- 
tries." Aristotle, however, in a greater degree 
than any other of the ancients, contributed to 
the foundation of political economy. His three 
treatises — "Ethics," which treats of the regu- 
lation of the individual man ; " Politics," of 
the relation of man toward others in a social 
capacity, both private and public, the family 
and the state; and "Economics," of the rela- 
tion of man toward property— constitute in a 
measure a connected work, each being depen- 
dent on and interwoven with the others. The 
expression political economy was first used by 
Aristotle, and is to be found in the " Econom- 
ics," book ii. chap. i. He lays down the dog- 
ma that the bounty of nature is the only true 
source of wealth, and he holds in great abhor- 
rence trading and usury, which latter, he says, 
" is most reasonably detested, as the increase 
of our fortune arises from the money itself, 
and not by employing it to the ])urpose for 
which it was intended." In his "Rhetoric" 
he lays down the most impoi'tant principles of 
political policy as follows : finance, peace and 
war, the safeguard of the country, importa- 
tion and exportation, and legislation. But lit- 
tle attention was paid to economic studies for 
many centuries after the time of Aristotle. 
Agriculture was looked upon with much more 
favor than any other employment involving 
labor, but even farm labor was performed al- 
most entirely by slaves belonging to and em- 
ployed by the landlords. The light in which 
trade was regarded by the Romans may be 
gathered from Cicero, who in his De Officiis 



says : " The gains of merchants, as well as of 
all who live by labor and not skill, are mean 
and illiberal. The very merchandise is a badge 
of their slavery." " All artisans are engaged 
in a degrading profession," and " there can 
be nothing ingenuous in a workshop." Sla- 
very was the very foundation of the industrial 
system of both Greeks and Romans, as war 
was of the national policy. The great Ro- 
man roads were built with a view to their mili- 
tary advantages, and not to trade and indus- 
try. Agriculture was the principal industrial 
occupation of the Romans, who were alike in- 
disposed to diversified industries and foreign 
trade. Blanqui says : "All the Roman legisla- 
tion, from the glorious days of the republic to 
the fall of the empire, is but the faithful repro- 
duction of the unconquerable prejudices of this 
people against labor and industry." Augus- 
tus pronounced the penalty of death against 
the senator Ovinius for having degraded him- 
self by conducting a manufactory. The Jus- 
tinian code (A. D. 528-535) takes cognizance 
not merely of the laws but of the arts, the 
industries, and agriculture, and has been pro- 
nounced "the first indication of a systematic 
political economy." The " Capitularies " of 
Charlemagne, promulgated in 801, have an 
economic interest from the fact that they take 
account as well of the employment and con- 
dition of the people as of the revenues of the 
state and the mode of assessing and collecting 
these latter. Yet the sovereign and the state 
were subjects of far more solicitude than the 
condition of the people. Hence for this amc rg 
other causes Charlemagne failed to found r.n 
enduring empire. — During the earlier partL'. of 
the middle ages no advance was made either 
in commercial adventure or in letters; but 
" the fortunate enterprises of the Portuguese 
and Spaniards during the 15th century, the 
active industry of Venice, Genoa, Florence, 
Pisa, the provinces of Flanders, and the free 
cities of Germany, about the same period, 
gradually directed the attention of some phi- 
losophers to the theory of wealth." These 
investigations originated in Italy. "As far 
back as the 16th century," adds Say, "Bote- 
ro had been engaged in investigating the real 
sources of public prosperity." The real and 
subetantial foundation of systematic political 
economy may be said to have been laid about 
the close of the 16th century. Botero's " Cause 
of the Greatness of Cities" (London, 1635), 
translated from a work of his published in 
Venice, 1598, is one of the earhest modern 
treatises on an economic subject. McCulloch 
says it " is principally worthy of notice from 
its showing that the author was fully master 
of all that is really true in the theory of Jilal- 
thus." The earliest general treatise of mod- 
ern times, and the first bearing the title of 
political economy, is the Traite de Veconomie 
politique, by Antoine de Montchrestien (4to, 
Rouen, 1613). This work treats of the util- 
ity of mechanic arts and the regulation of 



POLITICAL ECONOMY 



manufactures, the employment of men, tlie 
trades most important to communities, com- 
merce, transportation, money, &c. In 1613 
Antonio Serra published in Naples a volume 
on the causes which tend to aid an accumula- 
tion of the precious metals in those countries 
which do not produce them ; and in 1616 Gian 
Donato Turbulo published in the same city a 
treatise on the money of the country. About 
this time treatises on commerce and the pro- 
hibitive system were published by Duarte G-o- 
mez (Lisbon, 1622) and Juan de Oastafiares 
(1626). — The attention of the earliest English 
writers on political economy was directed to 
foreign trade. They saw that it was desirable 
to have a metallic currency suited to the wants 
of the business of their country, and while 
advocating the extension of this trade they 
recommended the adoption of such measures 
as would cause gold and silver to flow into tlie 
country, and not out. The policy advocated by 
this school is known to economists as the mer- 
cantile system. It was supported among oth- 
ers by Thomas Mun in "A Discourse of Trade 
from England unto the East Indies" (1621), 
and by the same author in " England's Trea- 
sure by Forraign Trade, or the Balance of our 
"Forraign Trade is the Rule of our Treasure " 
(1664). The last named treatise was probably 
written as early as 1635-'40. In 1668 appeared 
"England's Interest and Improvement," by 
Samuel Fortrey, who held that the trade with 
France occasioned a clear loss equal to the 
balance against England. This was attacked 
by an anonymous author in "England's Great 
Happiness" (London, 1677). Another writer 
of this school was Misselden, who in 1623 
published his "Circle of Commerce." In 
16(38 appeared Sir Josiah Child's "Brief Ob- 
servations concerning Trade and the Interest 
of Money," of which a new edition appeared 
in 1690. entitled "A new Discourse of Trade." 
Its author is usually classed among the mer- 
cantile school, but he did not regard a direct 
examination of the comparative amount of 
imports and exports, or even the movements 
of the precious metals, as a proper test of the 
advantages or disadvantages of a foreign trade; 
he rather looked to its increase or decrease as 
presenting the most tangible evidence. He 
advocated reducing the rate of interest from 
6 to 4 per cent., believing it to be the vnum 
magnum^ as he expressed it, and that it would 
greatly facilitate business. He recommended 
" the prevention of the exportation of our wool, 
and encouraging our woollen manufactures," 
and that in Ireland the "linen rather than 
the woollen manufacture be set up;" further, 
that the trade of those countries " that vend 
most of our manufactures, or supply us with 
materials to be furtlier manufactured in Eng- 
land," be most encouraged. Andrew Yarran- 
ton published "England's Improvement by Sea 
and Land: to outdo the Dutch without Fight- 
ing, to pay Debts without Moneys, to sot at 
Yv^ork the Poor of En'4'land with the Growth 



of our own Lands," &c. (2 parts, 1677-'81). 
He designed to advance the prosperity and 
power of England by the introduction of a 
general system of banking, thus furnishing 
"the great sinews of trade, the credit thereof 
making paper go in trade equal with ready 
money," a registry of real estate to facilitate its 
transfer and mortgage, the improvement and 
development of the production and trade in 
linen, woollen goods, and iron, the introduction 
of canals and the improvement of rivers and 
harbors, with a view to facilitating internal 
trade and intercourse. He held that a country 
desiring to be rich, powerful, and happy must 
introduce a diversified industry ; and he recog- 
nized the necessary means for bringing about 
its development. "Above all," says Patrick 
Edward Dove, who regards him as the founder 
of English political economy, " we must note 
his prospective sagacity, for he points out in 
detail the very course that England has pur- 
sued, and the very elements that were to con- 
tribute to her commercial superiority." — An 
important era in the history of political econ- 
omy, as well as of industrial development, was 
the year 1661, when Louis XIV. made Colbert 
comptroller general of the finances of France. 
He reduced the national finances to system and 
oi-der, and instituted a complete plan of checks 
and balances ; reformed abuses in this depart- 
ment, and punished those who had been guilty 
of them ; increased the revenues of the state 
while at the same time he decreased the bur- 
dens of the people; proxaded for economical 
expenditures, and abolished many of the inter- 
nal taxes ; developed agriculture, manufactures, 
the arts, and the sciences ; improved roads and 
rivers, built canals, and by every means fos- 
tered and increased the internal commerce of 
the country. By some wTiters certain features 
of his tariff laws of 1664 and 1667 have been 
condemned ; but on the other hand we are as- 
sured that for several years before his adminis- 
tration " France swarmed with vagabonds and 
mendicants," and had reached " the most pro- 
found depth of commercial depression," and 
that under the laws of which he was the au- 
thor she rose to " a point of wealth and in- 
dustry far beyond any she had ever reached 
since the foundation of the monarchy;" and M. 
Say says: "It is not true that Colbert ruined 
France," but that, " on the contrary. Franco 
under Colbert's administration emerged from 
the distress in which two regencies and a weak 
reign had involved her." — The various restric- 
tions upon trade, especially upon the iinpoi'ta- 
tion of manufactured goods and the exporta- 
tion of the raw materials used in manufactures, 
at this time, and even later, and especially in 
England, were very onerous. The penalties 
for the infringement of the laws were in many 
cases cruel and even barbarous. This system, 
with the policy pursued under it, was attacked 
by various writers. Among the earliest and 
ablest of these was Sir Dudley North, who pub- 
lished "Discourses on Trade" (4to, London, 



POLITICAL ECONOMY 



1691). Among the doctrines held by him as 
fundamental were : "That the whole world as 
to trade is but as one nation ; that money is a 
merchandise whereof there may be a glut as 
well as scarcity, and that even to an inconve- 
nience ; that a people cannot want money to 
serve the ordinary dealing, and more than 
enough they will not have ; and that money 
exported in trade is an increase to the wealth 
of a nation." Sir William Petty, in " Quantu- 
lumcunque, or a Tract concerning Money," had 
in 1682 attacked the theory of "the balance of 
trade;" and at a subsequent day there were 
many champions on both sides of this vexed 
question; among others, Dr. Davenant (1695- 
1712) and the Rev. Josiah Tucker (1753), Avho 
espoused the so-called mercantile theory, and 
Sir Matthew Decker (1744) and Joseph Harris 
(1757-8), who opposed it. In 1698 appeared 
in London " Historical and Political Essays, 
or Discourses on Several Subjects," including 
money, government, &c., by John Locke, com- 
prising papers which had been previously pub- 
lished, in which he had for the first time pro- 
mulgated some of the favorite theories in re- 
gard to money now held by European econo- 
mists. He taught that men in their bargains 
contract " not for denominations or sounds, but 
for the intrinsic value, which is the quantity of 
silver by public authority warranted to be in 
pieces of such denominations ;" and further, 
that "one metal alone can be the money of ac- 
count and contract, and the measure of com- 
merce in any country ; ... all other metals, 
gold as well as lead, are but commodities." — In 
1758 appeared at Versailles the Tableau econo- 
mique^ et maximes generales du gouvernement 
economiqiie^ by Francois Quesnay, followed 
by Theorie de Vimfjot, by the elder Mirabeau 
(1760), La philosopliie rurale, also by Mira- 
beau (1763), and various other works by Ques- 
nay and his disciples, expounding the physio- 
cratic or agricultural system of economy. The 
physiocratists held that the earth is the sole 
producer of wealth, and divided the industrial 
members of society into three classes : 1, the 
proprietors of the land; 2, the cultivators, 
whom they regarded as a productive class; 3, 
the mechanics, manufacturers, and merchants, 
whom they styled the unproductive class. That 
portion of his income which the landlord laid 
out in the improvement of his land they char- 
acterized as productive expenses ; and in so far 
as the landlord by these expenditures aided the 
farmer in increasing the amount of his produce, 
the landlord became one of the productive class. 
They maintained that the labor of mechanics, 
manufacturers, and artisans was unproductive, 
because it merely replaced the stock which 
employed them, together Avith the ordinary 
profits of that stock ; and that mercantile stock 
was unproductive because it merely continued 
the existence of its own value. They admitted 
that mechanics, manufacturers, and merchants 
might augment the revenue and wealth of so- 
ciety, but that it could only be accomjalished 



by parsimony or privation. They believed that 
the most perfect freedom of trade with all na- 
tions was the great desideratum for agricul- 
ture. Dissenting entirely from the central idea 
of this school and its logical deductions, Adam 
Smith, in 1776, expressed the opinion that 
" with all its imperfections it is, perhaps, the 
nearest approximation to the truth that has yet 
been published upon the subject of political 
economy." Among the most eminent of the 
physiocratists was Turgot, afterward comptrol- 
ler general of finances, who early embraced the 
views of Quesnay, and in 1771 published Ee- 
flexions sur laformation et la distribtition des 
richesses, the ablest of the treatises of this 
school. — A Spanish treatise well worthy of at- 
tention is " The Theory and Practice of Com- 
merce and Maritime Affairs," by Geronimo 
de Ustariz (Madrid, 1724 ; English, 2 vols., 
1751). " Though imbued with the prejudices 
of the mercantile system," says McCulloch, "it 
is valuable for the information it affords re- 
specting the internal policy, trade, and state of 
Spain from the reign of Charles V. doAvn- 
ward." Montesquieu's De V esprit des lois (Ge- 
neva, 1748) is worthy of note in the history 
of political economy, on account of its refer- 
ence to such subjects, particularly in regard 
to foreign commerce, taxes, public debts, and 
money. His theory of money very closely re- 
sembles the views of Hume upon the subject, 
which are now held by so many economists. 
— Among the contributions to political econ- 
omy up to the end of the 18th century, none 
evince greater reasoning power than the." Po- 
litical Discourses" of David Hume (1762). 
Among those essays which come within the 
limit of political economy are " Commerce," 
"Refinements in the Arts," "Money," "Inter- 
est," "The Balance of Trade," "The Jealousy 
of Trade," " Taxes," and " Public Credit." Ac- 
cording to the doctrines of these essays, every- 
thing in the world is purchased by labor, and 
our passions are the only causes of labor; 
when a nation abounds in manufactures and 
the mechanic arts, scientific agriculture becomes 
possible, and the cultivators of the soil redouble 
their industry and attention, the surplus pro- 
duce being readily exchanged for the products 
of those manufactures and mechanic arts, and 
the land furnishes more than is needed for the 
support of those who cultivate it ; while on 
the other hand, where this diversified industry 
does not flourish, there is no inducement for 
the agriculturists to increase their skill and 
industry, because of the difficulty of exchanging 
any surplus. Foreign trade by its imports fur- 
nishes raw materials for new manufactures, 
and by its exports gives employment to labor, 
which in the absence of this trade might be 
wasted. Necessity is the great incentive to 
industry and invention— rather the fears than 
the hopes, the aspirations, and the ambition of 
mankind. Money Hume considers not properly 
one of the subjects of commerce, but " only 
the instrument Avhich men have agreed upon 



6 



POLITICAL ECONOMY 



to facilitate the exchange of one commodity 
for another." He holds to the idea that " an 
increase in the amount of money in a country 
is rather inconvenient than advantageous, the 
influence wliich it exerts being to heighten the 
]>rice of commodities, and oblige every one 
to pay a greater number of these little yellow 
or white pieces for everything he purchases." 
But he did not fail to observe in actual expe- 
rience an apparent departure from the course 
here laid down. He had been led to notice 
that " in every kingdom into which money 
begins to flow in greater abundance than for- 
merly, everything takes a new face ; labor and 
industry gain life ; the merchant becomes more 
diligent and skilful, and even the farmer fol- 
lows his plough with greater alacrity and at- 
tention." He then enters into a series of rea- 
sonings to show that it is not immediately upon 
the receipt of this money into a country that 
a rise in prices takes place, but that " some 
time is required before the money circulates 
through the whole state, and makes its effects 
felt on all ranks of the people." The rate 
of interest, he holds, " is not derived from the 
quantity of the precious metals," but " high in- 
terest arises from three circumstances : a great 
demand for borrowing, little riches to supply 
that demand, and great profits arising from 
commerce." " I should as soon dread," he 
adds, " that all the springs and rivers should 
be exhausted, as that money should abandon 
a kingdom where there are people and indus- 
try." While deprecating as unwise and illib- 
eral all " those numberless bars, obstructions, 
and iinposts," which nations have laid with the 
object of retaining the precious metals, he says 
that " all taxes upon foreign commodities are 
not to be regarded as prejudicial or useless, 
but those only which are founded upon the 
jealousy" of the balance of trade. " A tax on 
German linen encourages home manufactures, 
and thereby multiplies our people and indus- 
try. A tax on brandy increases the sale of rum 
and supports our southern colonies." — Among 
the earliest of the systematic books on politi- 
cal economy must be included Lezioni di com- 
mereio, o di economia civile, by the Abate An- 
tonio Genovesi (2 vols., Naples, 1757). In the 
opinion of McOuUoch, it " is one of the best 
that has been written on the narrow and hol- 
low principles of the mercantile system;" but 
the denunciation here implied should be taken 
with much allowance for McOulloch's preju- 
dices. The book is celebrated, and has often 
been reprinted. — In 1767 appeared in London 
"An Inquiry into the Principles of Political 
Economy, being an Essay on the Science of 
Domestic Policy in Free Nations," bv Sir James 
Steuart, a countryman of Hume. Tins was the 
largest and most elaborate book on the sulv 
ject which had then been written in English. 
It treats in detail of population, agriculture, 
trade, industry, money, coin, credit, debts, in- 
terest, banks, exchange, public credit, and 
taxes. Economy in general Steuart defines as 



the art of providing for all the wants of a 
family with prudence and frugality. Political 
economy he regards as an art, and also a sci- 
ence ; and among its important objects are 
" to provide everything necessary for supply- 
ing the w^ants of society, and to employ the 
inhabitants in such a manner as naturally to 
create reciprocal relations and dependencies, 
so as to make their several interests lead them 
to supply one another with their reciprocal 
wants." Population he considers limited by 
the amount of food produced, and " that when 
too many of a society propagate, a part must 
starve." He holds that if a nation would aim 
to be continuously great and powerful by trade, 
she must first apply closely to the manufac- 
turing of every natural product of the country; 
and that when a people find the balance of 
trade to be against them, it is to their interest 
to take such measures as will correct the evil. 
He attacks the theory of Locke and Hume 
respecting the effect of an increased volume 
in the circulating medium upon prices. He 
argues that, while the wealth of a country un- 
doubtedly exerts an influence upon the prices 
of certain commodities, prices are really reg- 
ulated by " the complicated operations of de- 
mand and competition ;" and that when Hume 
says that " the price of every commodity is in 
proportion to the sum of money circulating in 
the market for that commodity," it really means 
that the money to be employed in the purchase 
of it is a measure of the demand for it ; and it 
in no wise interferes with Steuart's own propo- 
sition respecting the operation of supply, Avhich 
is fimdamental. In 1772, at the request of the 
East India company, the same author prepared 
" The Principles of Money as applied to the 
Coin of Bengal," in many respects a very able 
treatise. — In 1776 appeared in London the first 
edition of the great work of Adam Smith, 
destined to exert so decided an influence on 
political economy and legislation : "An Inqui- 
ry into the Nature and Causes of the Wealth 
of Nations." This remarkable book treats 
" of the causes of improvement in the produc- 
tive powers of labor, and the order according 
to which its produce is naturally distributed 
among the different ranks of the people ; of 
the nature, accumulation, and employment of 
stock ; of systems of political economy ; of the 
revenue of the sovereign or commonwealth." 
Dr. Smith holds that the annual labor of every 
nation is the fund which originally supplies it 
with what it annually consumes, and that the 
relative proportion which that produce bears 
to the consumers is the measure of their sup- 
ply in the necessaries and conveniences of life ; 
that the greatest improvement in the produc- 
tive power, skill, and judgment of labor has 
arisen from the division of labor ; that the ex- 
tent of the division of labor is limited by the 
market for its products; and that labor is the 
only universal as well as accurate measure of 
value, or the only standard by which we can 
compare the values of different commodities at 



POLITICAL ECONOMY 



7 



all times and in all places. He says that the 
demand for labor can only increase in propor- 
tion to the increase of the "funds destined for 
the payment of wages ;" and yet, while justly 
holding that it is labor which supplies a people 
with what they consume, he says that " the 
attention of government never was so unne- 
cessarily employed as when directed to watch 
over the preservation or increase of the quan- 
tity of money in any country." In his com- 
plicated arguments respecting "stock" — which 
he says consists of two parts, that which the 
possessor "expects is to afford him revenue," 
which "is called his capital," and also that 
which supplies his " immediate consumption " 
— he involves himself in some of the most 
serious fallacies to be found in his book, the 
deductions from which are fatal to much of 
his system. Money he terms "the great wheel 
of circulation, the great instrument of com- 
merce," and adds that it " makes a part and a 
very valuable part of the capital " of a coun- 
try or people, and that when possessed of it 
we can readily obtain whatever else we have 
occasion for. " The great affair is to get 
money ; when that is obtained, there is no dif- 
ficulty in making any other purchase." Here, 
it will be observed, he recognizes the impor- 
tant fact that money possesses a quality not 
to be found in any other commodity : its uni- 
versal acceptability among men, its power to 
purchase anything which man desires to sell. 
In tracing the general progress of wealth, he 
illustrates the importance of the diversification 
of industry to the farmer as follows: "An in- 
land country naturally fertile and easily culti- 
vated produces a great surplus of provisions 
beyond what is necessary for maintaining the 
cultivators; and on account of the expense 
of land carriage, and inconveniency of river 
navigation, it may frequently be difticult to 
send this surplus abroad." When then work- 
men engaged in other pursuits settle in the 
neighborhood, "they work up the materials 
of manufacture which the land produces, and 
exchange finished woi'k" "or the price of it 
for more materials and provisions." "They 
give a new value to the surplus part of the 
rude produce, by saving the expense of carry- 
ing it to the water side, or to some differ- 
ent market ; and they furnish the cultivators 
with something in exchange for it that is 
either useful or agreeable to them, upon easier 
terms than they could have obtained it before. 
. . . They are thus both encouraged and en- 
abled to increase this surplus produced by a 
further improvement and better cultivation of 
the land ; and as the fertility of the land had 
given birth to the manufacture, so the prog- 
ress of the manufacture reacts upon the land, 
and increases the fertility." As the work 
improves, more distant markets are reached ; 
"for though neither the rude produce, nor 
even the coarse manufacture, could without 
the greatest difficulty support the expense of 



improved manufacture easily may. In a small 
bulk it frequently contains the price of a great 
quantity of rude produce." With all its in- 
consistencies, few books have exerted so great 
an influence upon the affairs of mankind. — In 
1798 appeared anonymously "An Essay on the 
Principle of Population as it affects the Future 
Improvement of Society," the author of which 
was the Rev. T. R. Malthus. New revised 
and enlarged editions have since been pub- 
lished with the name of the author, the sixth 
in 1826. According to its preface, this pub- 
lication "owes origin to a conversation with 
a friend on the subject of William Godwin's 
essay on avarice and profusion in his 'In- 
quirer.' " In addition to an examination of 
the principle of population, and as a part of 
his subject, Malthus reviews the doctrines of 
Godwin as well as those of Condorcet, both of 
whom held to the possible progress of man 
toward future perfection, and a consequent 
reign of equality, peace, and justice. Impress- 
ed with the force of Godwin's protest against 
the defects and failures of the existing social 
organization, in the essay above referred to 
and in his "Inquiry concerning Political Jus- 
tice " (1793), respecting the unequal distribu- 
tion of property, Malthus aimed to overthrow 
it by presenting evidence that the inequalitj'- 
among mankind was due to a natural law. His 
principle is that "population when unchecked 
increases in a geometrical ratio, while subsis- 
tence increases only in an arithmetical ratio;" 
or, practically stated, that "in two centuries 
the population would be to the means of sub- 
sistence as 256 to 9, in three centuries as 4,096 
to 13, and in 2,000 years the difference would 
be almost incalculable." He does little more 
than state his proposition, when, almost with- 
out presenting proof in regard to the actual 
power of increase in man and food respective- 
ly, he proceeds to show what have been the 
checks to increase of population throughout 
the various countries of the world. Popula- 
tion, he holds, "is necessarily limited by the 
means of subsistence," and " invariably in- 
creases where those means increase, unless 
prevented by some very poweiful and obvious 
check." These checks he divides into the 
positive and the preventive. The former "in- 
clude every cause, whether arising from vice 
or misery, which in any degree contributes to 
shorten the natural duration of human life," 
among which maybe enumerated "unwhole- 
some occupations, severe labor, exposure to 
the seasons, extreme poverty, bad nursing of 
children, great towns, excesses of all kinds, the 
whole train of common diseases, and epidem- 
ics, wars, plagues, and famine." The pre- 
ventive checks include abstinence from mar- 
riage and sexual intercourse from considera- 
tions of prudence, and all vice and immorality 
tending to i-ender women unprolific. Few 
books have formed the subject of greater dis- 
cussion and controversy than this; and it is 
difficult to say whether among economic wri- 



POLITICAL ECONOMY 



ters those who do or who do not now accept 
its doctrines form the larger number. Yet it 
must be acknowledged that these doctrines 
have taken a hold upon the minds of men 
which it is difficult to shake off. According 
to Prof. E. E. Thompson, Malthus's main 
position was anticipated by Herrenschwand 
in his Discours fondamental sur la i^opulation 
(1786). In 1820 Godwin published his work 
"On Population, an Inquiry concerning the 
Power of Increase in the Numbers of Mankind, 
being an Answer to Mr. Malthus's Essay on 
that Subject." The " Inquiry " comprises a 
caref al examination of the progress of popula- 
tion throughout the world, and of the causes 
which tend to prevent its increase, of the 
means of subsistence of man, and a review of 
Malthus's doctrines from a moral as well as a 
philosoijhical standpoint. Godwin gives as his 
reason for producing his book, that Malthus 
had said in his preface that the " Essay on 
Population " was indebted to his writings for 
its existence ; and as " it still holds on its pros- 
perous career," "I cannot consent," he adds, 
"to close my eyes for ever, with the judg- 
ment, as the matter now seems to stand, re- 
corded on my tomb, that in attempting one 
further advance in the route of improvement, 
I should have brought on the destruction of all 
that Solon, and Montesquieu, and Sidney . . . 
had seemed to have effected for the redemption 
and the elevation of mankind." He says that 
Malthus's book had then been before the public 
20 years without any one, so far as he knew, 
attempting a refutation of his main principle. 
One of the most detailed examinations of the 
work of Malthus which have been published 
is " The Law of Population," by Michael 
Thomas Sadler, M. P. (London, 1830). In ad- 
dition to an elaborate answer to Malthus's 
theory, Mr. Sadler develops a doctrine of popu- 
lation. "The prolificness of human beings," 
he says, " otherwise similarly circumstanced, 
varies inversely as their numbers ;" and he pre- 
sents a mass of evidence to prove that nature 
has not " invested man with a fixed and un- 
varying measure of prolificness," but that the 
Creator has " regulated the prolificness of his 
creatures in reference to the circumstances in 
which his providence shall place them, instead 
of leaving that regulation to the busy, selfisli, 
and ignorant interference of men." In arti- 
cles published in July, 1830, and January, 1831, 
and now included in the collection of his es- 
says, Macaulay attacked Sadler's book with 
much severity, and at the same time indicated 
unmistakably his belief in the doctrines of 
Malthus. The Rev. Thomas Chalmers, D. D., 
wlio had thoroughly imbibed these doctrines, 
published a volume on "Political Economy in 
connection with the Moral State and Moral 
Prospects of Society " (Glasgow, 1832). Fear- 
ing " a sweeping, headlong anarchy," he aimed 
to present tlie evidence of the "tremendous 
evil" of over population, and at the same time 
to appeal to iiis countrymen to take steps to 



"avert it from their borders." In 1840 ap- 
peared in Edinburgh "The Principles of Pop- 
ulation, and their Connection with Human 
Happiness," by Archibald Alison (2 vols. 
8vo), the first draft of which, says the au- 
thor, was composed in 1809 and 1810, while 
the treatise was rewritten between 1819 and 
1828. This book is wonderfully rich in facts 
and illustrations, and deduces a theory of self- 
adjustment in the power of increase in popula- 
tion which may be briefly stated as follows : 
There is a rapid increase of numbers in the 
early stages of society, a gradual retardation 
as society advances, and an ultimate stationary 
condition in its last stages. It need hardly be 
added that Mr. Alison is an uncompromising 
adversary of Malthus, and that he sees nothing 
in this question which can give any cause for 
alarm for the future of mankind upon the 
earth. In 1841 Thomas Doubleday published 
in London " The true Law of Population shown 
to be connected with the Food of the People " 
(new ed., 1854), in which he undertakes to de- 
monstrate that " whenever a species or genus 
is endangered, a corresponding effort is inva- 
riably made by nature for its preservation and 
continuance, by an increase of fecundity or fer- 
tility ; and that this especially takes place when- 
ever such danger arises from a diminution of 
proper nourishment," and that consequently 
" the deplethoric state is favorable to fertili- 
ty, and that on the other hand the plethoric 
state is unfavorable to fertility." Thus " there 
is in all societies a constant increase going on 
among that portion of it which is the worst 
supplied with food ; in short, among the poor- 
est." "The Westminster Review " for April, 
1852, contains " A New Theory of Popula- 
tion," understood to be by Herbert Spencer, 
deduced from the general law of animal fer- 
tility. It argues that an antagonism exists be- 
tween individuation and reproduction; that 
matter in its lower forms, that of vegetables 
for instance, possesses a stronger power of 
increase than in all higher forms; that the 
capacity of reproduction in animals is in an 
inverse ratio to their individuation; that the 
ability to maintain individual life and that of 
multiplication vary in the same manner also. 
He further demonstrates that " the ability to 
maintain life is in all cases measured by the 
development of the nervous system." In 
Spencer's "Principles of Biology" the doc- 
trines here stated have been further elaborated 
and illustrated. " Population and Capital," 
consisting of lectures delivered before the uni- 
versity of Oxford in 1853-'4, by George K. 
Rickards (London, 1854), contends by careful 
induction from facts that the truth is the very 
reverse of Malthus's theory; "that the pro- 
ductive power of a community tends to increase 
more rapidly than the number of its inhabi- 
tants." W. R. Greg, in "Enigmas of Life" 
(London, 1872), has taken issue with Malthus, 
and says one influence tending to reduce the 
rate of increase " may be specified with con- 



POLITICAL ECONOMY 



9 



siderable confidence, namely, the tendency of 
cerebral development to lessen fecundity," and 
approvingly quotes Herbert Spencer's views. 
But he says that some years ago he had hoped 
to be able to show that Malthus's premises 
were imperfect and his conclusions in conse- 
quence unsound. " It is with sadness," he adds, 
" I am now compelled to admit that further 
investigation and deeper thought have shaken 
this confidence. I now only venture to suggest 
as eminently probable what I once fancied I 
could demonstrate to be certain." — Probably 
no work on political economy has been more 
extensively read or studied, or has exerted a 
larger influence in the formation of opinions 
in the United States at least, than Jean Bap- 
tiste Say's "Treatise on Political Economy, 
or the Production, Distribution, and Con- 
sumption of Wealth" (Paris, 1803; 6th ed., 
1841). This treatise is in form the most scien- 
tific and methodical which at the time of its 
publication had appeared in any language. 
"If," says Say, " we 'take the pains to inquire 
■what that is which mankind in a social state 
of existence denominates wealth, we shall find 
the term employed to designate an indefinite 
quantity of objects bearing inherent value, as 
of land, of metal, of coin, of grain, of stuffs, of 
commodities of every description. AVhen its 
signification is further extended to landed se- 
curities, bills, notes of haiid, and the like, it is 
evidently because they contain obligations to 
deliver things possessed of inherent value. In 
point of fact, wealth can only exist where there 
are things possessed of real and intrinsic value. 
Wealth is proportionate to the quantum of that 
value ; great when the aggregate of component 
value is great, small when that aggregate is 
small. . . . The knowledge of the real nature 
of wealth, thus defined, of the difllculties that 
must be surmounted in its attainment, of the 
course and order of its distribution among the 
members of society, of the uses to which it may 
be applied, and further, of the consequences 
resulting respectively from these several cir- 
cumstances, constitute that branch of science 
now entitled political economy." Subsequent- 
ly Say published his lectures on the applica- 
tion of the science, under the title of Covrs 
complet d^economie folitique pratique^ smirl 
de melanries (6 vols., Paris, 1828-'30; 3d ed., 
edited by Horace Say, 1852). An examination 
of this book will show that he had materially 
altered his views, and was now disposed to treat 
political economy as something higher and 
better than a mere science of wealth. " The 
object of political economy," he says in this 
later book, " seems heretofore to have been 
restricted to the knowledge of the laws which 
govern the production, distribution, and con- 
sumption of riches. And it is so that I have 
considered it in my treatise upon political 
economy, published first in 1803; yet in that 
same work it can be seen that the science per- 
tains to everything in society." In the same 
year in which Say's first treatise appeared, 



Sismondi published in Geneva his Trqite de 
la richesse commerciale. At this time Sis- 
mondi was a decided follower of Adam Smith ; 
"but," says Colwell, "being an ardent friend 
of humanity, his views underwent a complete 
change in the progress of his investigations. . 
No more pleasing task could be olTered us 
than turning through the voluminous works 
of Sismondi for the evidences of his pure love 
of human welfare, and his detestation of the 
science of wealth apart from human well-be- 
ing." — At the request of xllexander I. of Kus- 
sia H. Storch prepared his Cotirs d''economie 
2)olitique, ou exjwsition dcs princij)€S qvi de- 
terminent la prosperite des nations (St. Peters- 
burg, 1815). "The emperor Alexander, hav- 
ing taken his lessons in political economy from 
M. Storch," says Carey, "determined to carry 
out in the administration of the empire the 
lessons he had learned in the closet ; but the 
result proved most disastrous. British goods 
flowed in in a constant stream, and Russian 
gold flowed out; and the government was par- 
alyzed, while the manufacturers Avere ruined. 
. . . Count Nesselrode issued a circular prelim- 
inary to a change of system, in \\hich it was 
declared that Russia found herself forced to 
resort to a system of independent commerce; 
that the products of the empire no longer found 
markets abroad; that the manufactures of the 
country were exceedingly depressed; that the 
coin of the country was rapidly flowing out to 
distant nations; that the most solid mercantile 
establishments had become endangered ; and 
that agriculture and commerce as well as manu- 
facturing industry were not only paralyzed, but 
had been brought to the brink of ruin." In 
1824 Russia again imposed heavier duties in 
opposition to the theories of Storch. — "The 
Principles of Political Economy and Taxation," 
by David Ricardo, appeared in London in 1817 
(3d ed., 1821). The most noted doctrines of 
this work are the theory of rent and the con- 
sequent theory of value. The former, with 
which the name of Ricardo is now always as- 
sociated, was announced in 1777 by Jnmes An- 
derson, a Scotchman, in a tract entitled "An 
Inquiry into the Nature of the Corn Laws;" 
and it seems to have been so completely over- 
looked and forgotten, that "when in 1815.'" 
says an English economist, "Mr. Malthus and 
Sir Edward West published their tracts exhib- 
iting the nature and progress of rent, they were 
universally believed to have for the first time 
discovered the laws by which it is governed." 
The theories of rent and value, abridged from 
Ricardo's own statement, are as follows: On 
the first settling of a country .in which there 
is an abundance of rich and fertile land, there 
will be no rent; for no one would pay for 
the use of land when there was an abundant 
quantity not yet ap])ro])riated. If all land 
had the same properties, if it were boundless 
in quantity and uniform in quality, no charge 
could be made for its use, unless where it pos- 
sessed peculiar advantages of situation. It is 



10 



POLITICAL ECONOMY 



only tlien because land is not unlimited in 
quantity and uniform in quality, and because 
in the progress of population land of an infe- 
rior quality or less advantageously situated is 
called into cultivation, that rent is ever paid 
for the use of it. When in the progress of 
society land of the second degree of fertility 
is taken into cultivation, rent immediately 
commences on that of the first quality ; and 
the amount of that rent Avill depend on the 
difference in the quality of these two portions 
of land. When land of the third quality is 
taken into cultivation, rent immediately com- 
mences on the second, and it is regulated as 
before by the difference in their respective 
productive powers. At the same time the rent 
of the land of the first quality will rise, for 
that must always be above the rent of the 
second, by the difference between the produce 
which they yield with a given quantity of cap- 
ital and labor. " The most fertile and favora- 
bly situated land will be first cultivated, and 
the exchangeable value of its produce will be 
adjusted in the same manner as the exchange- 
able value of all other commodities, by the 
total quantity of labor necessary in various 
forms, from first to last, to produce it, and 
bring it to market. When land of an inferior 
quality is taken into cultivation, the exchange- 
able value of raw produce will rise, because 
more labor is required to produce it." " This," 
says one of Ricardo's followers, "is the fun- 
damental theorem of the science of value, and 
the clue which unravels tlie laws that regu- 
late the distribution of wealth." By reason of 
these theories of rent and value, if in accor- 
dance with the facts, the landlord would be en- 
abled to command a steadily increasing rent as 
the yield per acre declined, until he absorbed 
the entire product of the land ; and food would 
as steadily increase in cost as population in- 
creased. Starvation and wretchedness could 
not fail to be the lot of the mass of mankind 
under such a condition of things. These theo- 
ries seemed to aid in accounting for the Mal- 
thusian principle of population, and they at 
once took their positions as logically anterior 
to that doctrine, and became the foundation 
of the system now known as Ricardo-Malthu- 
sianism. — In 1825 Samuel Bailey, author of 
" Essays on the Formation and Publication of 
Opinions," published "A Critical Dissertation 
on the Nature, Measure, and Causes of Value," 
in which he attacked Ricardo's theory of value. 
In 1821-2 James Mill published " Elements of 
Political Economy," which is to some extent 
a statement and abstract elaboration of some 
of the doctrines of Adam Smith and Ricardo 
in regard to production and distribution, and 
those of Malthus respecting population. — One 
of tlie most widely known writers on political 
o;onomv and statistics for the last generation 
was J. R. McOulloch, who prepared the article 
for the supplement to the "Encycloprodia Bri- 
txnnica," a separate clition of which appeared 
in 1825, and which has sinjo passed through 



several editions, the last in 1864 under the 
title of " The Principles of Political Economy, 
with some Inquiries respecting their Appli- 
cation, and a Sketch of the Rise and Progress 
of the Science." " McCulloch," says Colwell, 
" belongs neither to the school of Say, nor to 
the still more refined and strict school of Tracy, 
Rossi, and Senior. He persists in considering 
all the topics of political economy from a prac- 
tical point of view. He speaks of a science, 
it is true, but only in that popular sense in 
which men speak of the science of politics, 
which is a very different sense from that in 
which it is employed by Rossi, Senior, and J. 
S. Mill." — In the " Encylopsedia Metropoli- 
tana" in 1835, and subsequently in a separate 
form, appeared " Political Economy " by Nas- 
sau W. Senior, professor in the university of 
Oxford ; the subject being, by the plan of the 
"Encyclopsedia," classed as among the pure 
sciences. But the author of this treatise failed 
to confine his investigations strictly within 
these bounds. " We propose in the following 
treatise," he says in opening, " to give an out- 
line of the science which treats of the nature, 
the production, and the distribution of wealth. 
To that science we give the name of .political 
economy." He insists too on limiting his in- 
quiries to these subjects as the only true and 
legitimate ones, and adds that political econo- 
my does not treat of " happiness, but wealth." 
He even declines to examine into the effects 
upon society of the possession of wealth, what 
distribution is most desirable, or what are the 
means by which any peculiar distribution can 
be carried into effect by legislation. All of 
these questions are " of great interest and diffi- 
culty, but no more form part of the science of 
political economy, in the sense in which we 
use that term, than navigation forms part of 
the science of astronomy." The premises of 
the political economist he regards as consist- 
ing "of a few, general propositions, the result 
of observation or consciousness, and scarcel)'' 
requiring proof or formal statement, which 
almost every man, as soon as he hears them, 
admits as familiar to his thoughts, or at least 
as included in his previous knowledge ; and 
his inferences are nearly as general, and, if he 
has reasoned correctly, as certain as his prem- 
ises." The fundamental propositions in po- 
litical economy Mr. Senior thus states : 1, every 
man desires to obtain additional wealth with 
as little sacrifice as possible ; 2, the population 
of the world, or in other words the number of 
persons inhabiting it, is limited only by moral 
and physical evil, or by the fear of a deficiency 
of those articles of wealth which the habits of 
the individuals of each class of its inhabitants 
lead them to require ; 3, the powers-of labor, 
and of the other instruments which produce 
wealth, may be indefinitely increased by using 
their products as the means of further produc- 
tion ; 4, agricultural skill remaining the same, 
additional labor em])]oyed on tlic land within a 
given district produces in general a less propor- 



POLITICAL ECONOMY 



11 



tionate return ; or in other -words, though Avith 
every increase of the labor bestowed the aggre- 
gate return is increased, the increase of the re- 
turn is not in proportion to the increase of la- 
bor. Mr. Senior belonged, as can be seen, to the 
school of Ricardo and Malthus, and believed 
with them in the limited powers of the earth, 
although in reality he took issue with Malthus 
in the consideration of his theory of population. 
— No English writer on political economy du- 
ring the present century has attracted more 
attention or been regarded as higher author- 
ity than John Stuart Mill. He defines it to 
be '' the science which treats of the produc- 
tion and distribution of wealth, so far as they 
depend upon the laws of human nature ; or 
the science relating to the moral or psycho- 
logical laws of the production and distribu- 
tion of wealth." Again he says : " Political 
economy may be defined as follows, and the 
definition seems to be complete : The science 
which traces the laws of such of the phe- 
nomena of society as arise from the combined 
operations of mankind for the production of 
wealth, in so far as those phenomena are not 
modified by the pursuit of any other object." 
Political economy is "essentially an abstract 
science," and its method " is the a priori.'''' 
"It reasons," he contends, and "must ne- 
cessarily reason, from assumptions, not from 
facts." " The conclusions of political econo- 
my, consequently, like those of geometry, are 
only true, as the common phrase is, in the ab- 
stract." "That which is true in the abstract 
is always true in the concrete with proper al- 
lowances." Not only "the method a p>'>"iori 
is the legitimate mode of philosojAical investi- 
gation in the moral sciences," but " it is the 
only mode." The a posteriori method, or that 
of specific experience, " is altogether ineffica- 
cious," although it may be " usefully applied 
in aid of the a priori.'''' Therefore, "since it 
is vain to hope that truth can be arrived at, 
either in political economy or in any other de- 
partment of the social science, while we look 
at the facts in the concrete, clothed in all the 
complexity with which nature has surrounded 
them, and endeavor to elicit a general law by 
a process of induction from a comparison of 
details, there remains no other method than 
t\iQ a p>riori one, or that of abstract specula- 
tion." " In all the intercourse of man with 
nature," proceeds Mr. Mill, " whether we con- 
sider him as acting upon it or as receiving im- 
pressions from it, the effect or phenomenon 
depends upon causes of two kinds, the proper- 
ties of the object acting and those of the ob- 
ject acted upon. Everything which can pos- 
sibly happen, in which man and external things 
are jointly concerned, results from the joint 
operation of the law or laws of matter, and 
the law or laws of the human mind." " There 
are no phenomena," he continues, " which de- 
pend exclusively upon the laws of mind ; even 
the phenomena of the mind itself being par- 
tially dependent upon the physiological laws 



of the body." Mr. Mill acknowledges that 
"the laws of the production of objects which 
constitute wealth are the subject matter both 
of political economy and of almost all the 
physical sciences;" but he considers that po- 
litical economy "presupposes all the physical 
sciences," and adds that " it takes for granted 
that the physical part of the process takes 
place somehow." In other words, it matters 
not to political economy why, how, or under 
what circumstances these laws of matter oper- 
ate. Mr. Mill's design in writing his "Princi- 
ples of Political Economy " was to produce "a 
work similar in its object and general concep- 
tion to that of Adam Smith ; to exhibit the 
economical phenomena of society in the rela- 
tion in which they stand to the best social 
ideas of the present time." He was a full be- 
liever in the views of Locke, Montesquieu, 
Hume, and Smith in regard to money ; in those 
of Ricardo on rent, and Malthus on population. 
He combats with much energy " protection- 
ism," but holds that there is one, and only one 
case, "in which, on mere principles of politi- 
cal economy, protecting duties can be defensi- 
ble;" that is, "when they are imposed tem- 
porarily (especially in a young and rising na- 
tion), in hopes of naturalizing a foreign indus- 
try, in itself perfectly suitable to the circum- 
stances of the country." Mill was long among 
the ablest and most distinguished supporters 
of the wage-fund theory, which, stated by him 
so lately as May, 1869, in the "Fortnightly Re- 
view," is briefly as follows : " There is supposed 
to be, at any given instant, a sum of wealth 
which is unconditionally devoted to the pay- 
ment of wages of labor. This sum is not re- 
garded as unalterable, for it is augmented by 
saving, and increases with the progress of 
wealth ; but it is reasoned upon as at any given 
moment a predetermined amount. More than 
that amount it is assumed that the wages- 
receiving class cannot possibly divide among 
them ; that amount, and no less, they cannot 
but obtain. So that, the sum to be divided 
being fixed, the wages of each depend solely 
on the divisor, the number of participants." 
This theory, with Mill as its especial defend- 
er, was very vigorously attacked in 1866 by 
Francis D. Longe, a London barrister, in a 
pamphlet entitled " A Refutation of the "Wage- 
Fund Theory of Modern Political Economy " 
(2d ed., 1869). In 1869 W. T. Thornton pub- 
lished a volume " On Labor, its "Wrongful 
Claims and Rightful Dues," in which he also 
assailed the wage-fund theory, but, as is be- 
lieved, by no means so ably as Longe had 
done. Mill, in the magazine article above 
cited, entirely recanted his belief in the the- 
ory, on the groimd that Thornton had com- 
pletely refuted it. But Prof. Cairnes, among 
other English economists, has refused to ac- 
cept the acknowledgment of ]\Iill as evidence 
of the falsity of the theory. A careful exam- 
ination of this theory -will show that it is but 
an elaboration of the doctrine of Adam Smith 



12 



POLITICAL ECONOMY 



quoted above, to the effect tliat the demand for 
labor can only increase in proportion to the 
increase of the " funds destined for the pay- 
ment of wages." — Among the most prominent 
of English political economists at the present 
day is Prof. J. E. Cairnes, whose most elabo- 
rate production, " Some leading Principles of 
Political Economy newly Expounded," was 
published in 1874. "While the author says that 
it is " an attempt to recast some considerable 
portion of political economy," he would " be 
sorry it were regarded as in any sense antag- 
onistic in its attitude toward the science built 
up by the labors of Adam Smith, Malthus, 
Eicardo, and Mill." " Nor do the final con- 
clusions which I have reached differ very wide- 
ly on any important points from those at 
which they have arrived. The points on which 
I have ventured to join issue with them are 
what, in Bacon's language, may be called the 
axiomata media of the science — those interme- 
diate principles by means of which the de- 
tailed results are connected with the higher 
causes, which produce them. If I have not 
deceived myself, there is in this portion of 
political economy, as at present generally re- 
ceived, no small proportion of faulty mate- 
rial." Prof. W. Stanley Jevons, M. A., pub- 
lished in 1871 " The Theory of Political Econ- 
omy," in which he endeavors to construct a 
theory of the subject on a mathematical or 
quantitative basis, believing that many of the 
commonly received theories are perniciously 
erroneous. He treats political economy as the 
calculus of pleasure and pain, and he applies the 
differential calculus to wealth, utility, value, 
demand, supply, capital, interest, labor, &c. 
Prof. Henry Fawcett's " Manual of Political 
economy " (1863), which has passed through 
several editions, is very decided in its advo- 
cacy of Ricardo's theory of rent and Malthus's 
of population. The book, lilce almost all of 
its school, treats solely of a science of wealth. 
"While the author is in the fullest sense of the 
word a believer in the doctrines of Locke, Mon- 
tesquieu, and Hame in regard to the effect of the 
volume of money on prices, he maintains that 
the use of the various forms of credit and of 
checks and clearing houses may increase prices 
in a like manner with an increase in the vol- 
ume of money. He takes ground against the 
wisdom and expediency of Sir Robert Peel's 
bank-charter act. (See Bank.) — Herbert Spen- 
cer has ])rojected "Principles of Sociology," as 
a part of his system of philosoi)hy, the publica- 
tion of wliich was begun in 1860. In 1873 he 
published "The Study of Sociology." " Several 
years since," says Prof. E. L. Younums, " Mr. 
Spencer foresaw the difficulty that would arise 
in working out the principles of social science, 
from a lack of the data or facts necessary as 
a basis of reasoning upon the subject, and he 
saw that before the philosophy could be elabo- 
rated tliese facts must be systematically and 
exhaustively collected;" and he quotas Spen- 
cer as early as 18.jl) to sliow how clearly he 



then "perceived the nature, diversity, and ex- 
tent of the facts upon which a true social 
science must rest." — Almost the entire existing 
school of English political economists advocate 
" free trade " as the rule of intercourse between 
nations. Exceptions may be named in the Rt. 
Hon. Sir John Barnard Byles, author of " So- 
phisms of Free Trade and Popular Political 
Economy " (London, 1849 ; 9th ed., 1870), and 
Sir Edward Sullivan, " Protection to Native 
Industry " (London and Philadelphia, 1870). — 
Dr. Franklin is the earliest American politico- 
economic writer of whom we have any rec- 
ord; he published at Philadelphia in 1729 "A 
Modest Inquiry into the Nature and Necessity 
of a Paper Currency," of which at a subse- 
quent period he said: "It was well received 
by the common people in general, but the rich 
men disliked it, for it increased and strength- 
ened the clamor for more money; and as tliey 
happened to have no writers among them that 
were able to answer it, their opposition slack- 
ened, and the point was carried by a majority 
in the house." This was followed by " Obser- 
vations concerning the Increase of Mankind 
and the Peopling of Countries " (1751), other 
papers on paper money before and during the 
revolution, and various other productions. In 
some of these he maintained doctrines par- 
taking somewhat of those of the school of 
Quesnay ; in others he is shown to have pre- 
sented in advance of Adam Smith views such 
as were elaborated, and brought into promi- 
nence by that author. "A Discourse concern- 
ing the Currencies of the British Plantations 
in America, especially with regard to their 
Paper Money," published in Boston in 1740 
and reprinted in Lord Overstone's volume of 
" Scarce and "Valuable Tracts on Paper Currency 
and Banking " (1857), is a valuable production, 
evincing much research. In a "Letter from a 
Gentleman in Pliiladelphia to his Friend in 
London," published in 1765, known to have 
been written by John Dickinson, afterward 
president of Pennsylvania, and a member of 
congress during the revolution, the current of 
trade with the mother country, the extent to 
which that trade had exhausted the colonies of 
coin, the importance of an emission of paper 
money properly secured, the policy of pro- 
moting manufactures among themselves, and 
other questions of this character, are exam- 
ined. In 1791 appeared in Philadelphia "Po- 
litical Essays on the Nature and Operations of 
Money, Public Finances, and other Subjects, 
publislied during the American "War and con- 
tinued up to the Present Year," by Pelatiah 
Webster. Tliese essays are full of facts, fig- 
ure^, and vigorous reasoning. The author was 
a violent opponent of paper money, 'and espe- 
cially of its issue in the manner in which it 
had been done by the continental congress, 
almost without limit, and without the neces- 
sary taxation to withdraw it from circula- 
tion. On Jan. 14, 1790, Alexander Hamil- 
ton, the first secretary of the treasury un- 



POLITICAL ECOFOMY 



1 ^ 



der the federal constitution, presented to the 
house of representatives a report on finance, 
■which was followed on April 23 by one on 
duties upon imports ; Dec. 13, on pubUc cred- 
it ; Dec. 14, on a national bank ; Jan. 28, 
1791, on the establishment of a mint; and 
Dec. 5, on manufactures. It would be dif- 
ficult to find, among all the state papers or 
treatises on political economy which appeared 
before the close of the 18th century, any pro- 
ductions of this character surpassing these in 
a thorough knowledge of the subjects, clear- 
ness and precision of statement, and logical 
exactness. The report of Alexander J. Dallas, 
secretary of the treasury, to the house of rep- 
resentatives, Oct. 17, 1814, on the national 
finances, and that of Feb. 12, 1816, in regard 
to a general tariff of duties, are among the 
able economic state papers which have emana- 
ted from this government. The "Addresses 
of the Philadelphia Society for the Promo- 
tion of National Industry" (1819), and "The 
New Olive Branch " (1820), subsequently with 
other papers collected and published under the 
title of "Essays on Political Economy " (1822), 
by Mathew Carey, dealt almost entirely in 
facts, figures, and references to history; and 
thus Carey reached the conviction that "there 
is a complete identity of interest between agri- 
culture, manufactures, and commerce." The 
first formal treatise on the subject written 
in the United States is Daniel Eaymond's 
" Thoughts on Political Economy " (Baltimore, 
1820). The author endeavors, and with some 
success, to escape from the complications and 
inconsistencies of the economists. His exam- 
ination of some of the arguments of Adam 
Smith in regard to stock are original, vigor- 
ous, and conclusive. John Rae, a Scotchman, 
published in Boston in 1834 a "Statement 
of some New Principles on the subject of 
Political Economy," which has been quoted 
and highly commended by John Stuart Mill 
in his " Principles of Political Economy," 
and he says of it: "In no other book known 
to me is so much light thrown, both from 
principles and history, on the causes which 
determine the accumulation of capital." — In 
1835 appeared at Philadelphia an "Essay on 
the Rate of Wages," the first of the works 
of Henry C. Carey. He took ground against 
regarding political economy as the science of 
wealth, arid insisted upon considering its 
"great object" and "its chief claim to atten- 
tion the promotion of the happiness of na- 
tions." This was followed by his "Principles 
of Political Economy" (3 vols., 1837-'40), 
in which he holds that value is determined 
by the cost of reproduction, and that every 
improvement in the mode of producing any 
commodity tends to lessen the value of com- 
modities of the same description previously 
existing ; that in all advancing countries ac- 
cumulated capital has a constant tendency to 
fall in value when compared with labor; labor 
therefore steadily growing in its power to 



command capital, and e converso the power of 
capital over labor as steadily diminishing ; la- 
bor and capital in their combined action con- 
tinually producing a larger return for the same 
outlay, of which larger return an increasing 
proportion goes to the laborer, while the share 
of the capitalist diminishes in its proportion, 
but increases in amount, being taken from a 
larger yield. In 1848 appeared Mr. Carey's 
work entitled " The Past, the Present, and the 
Future." Its object was that of demonstrating 
the existence of a simple and beautiful law of 
nature in virtue of which the work of occupa- 
tion and cultivation of the eai-th had always of 
necessity begun upon the higher, drier, and 
poorer lands, passing thence, with the growth 
of wealth and population, to the lower and 
richer soils, with constant increase in the re- 
turn to labor. Here was a complete rever- 
sal of the doctrines of Malthus and Ricardo. 
In his "Principles of Social Science" (3 vols. 
8vo, Philadelphia, 1858-'9), he most clearly 
draws the distinction between the science, 
which treats of the natural laws governing 
the subject, and the art, political economy, by 
means of which the obstructions to the opera- 
tion of those laws may be removed. He de- 
fines his subject as being "the science of the 
laws A^hich govern man in his efforts to se- 
cure for himself the highest individuality and 
the greatest power of association with his fel- 
low man." The more numerous the differences 
in the demands of society, the more complete 
becomes the development of the individualities 
of its members, the greater is the power of as- 
sociation and combination, the more rapid the 
progress, and the more perfect the responsi- 
bility for the proper use of the faculties which 
have been developed. Here, as everywhere, 
it is shown that in variety there is unity, and 
that the nation which would have peace and 
harmony at home and abroad must adopt a 
policy Avhich shall develop the infinitely va- 
rious faculties of its people — the plough, the 
loom, and the anvil working together, each for 
the advantage of the others. The social laws 
are thus, according to Carey, identical with 
those which govern matter in all its various 
forms ; differences everywhere exciting forces, 
forces exciting heat in matter and impulse in 
mind, and heat and impulse reexciting motion. 
Nature's laws being tlius universal, the branch- 
es of science constitute but one great and har- 
monious whole, the social parts demanding the 
same methods of study and investigation. The 
methodical study of nature does, and of neces- 
sity must, take the place of the metaphysical. 
The third chapter of the book is devoted to an 
exposition of the great sei'ies of changes which 
the earth must undergo in furnishing the resi- 
dence and support of vegetable, animal, and 
human life in the order of their respective ap- 
pearances upon it, the relation and dependence 
of their various subsistence upon each other, 
and the circulation of the common elements 
of their structure, beginning with the disinte- 



14 



POLITICAL ECONOMY 



grated rock in its simplest forms, and thence 
ascending through vegetable and animal organ- 
isms to that of man, in which their greatest 
complexity and highest sphere are reached, and 
whence they are again set free to pass through 
that never ending circuit which constitutes the 
entire organic and inorganic creation, one per- 
fectly balanced system of universal exchange; 
an incessant flux of the forms of matter in 
their ascent from the simple to the most com- 
plex, adjusted precisely to the growing require- 
ments of the successi/e orders of being in the 
great scale of vital development, the higher 
forms of being never outgrowing or overtop- 
ping the lower from which they spring, and 
to which they must of necessity return. Such 
are the reciprocities of motion, force, and func- 
tion, in which Carey finds an order and a sys- 
tem which, as he believes, put to flight the doc- 
trine of discords and disproportions announced 
by Malthus, and since adopted by so many of 
the economists of Europe. A chapter on the 
new doctrine of the occupation of the earth, 
already referred to, is followed by one devoted 
to an examination of the question of value. 
Utility, according to Carey, is the measure of 
man's power over nature. All the utilities de- 
veloped centre themselves in man, with con- 
stant increase of his power, and as constant 
decline of values, which are but the measure 
of nature's resistance to the gratification of 
man's desires. Wealth consists in man's power 
to command the always gratuitous services 
of nature. Production consists in directing 
the forces of nature to the service of man. 
Every act of consumption is also an act of pro- 
duction, water being consumed in the produc- 
tion of air, air being consumed in the production 
of water, both being consumed in the produc- 
tion of plants, which in tlieir turn are consumed 
in the production of men and animals, all of 
which are finally resolved into the elements of 
which they are composed, to go their round 
again in the reproduction of plants, animals, 
and men. Capital is the instrument by the aid 
of which the work is done, whether existing 
in the form of land and its improvements, 
ships, ploughs, mental development, books, or 
corn. Trade is the performance of exchanges 
for other persons, and is the instrument used 
by commerce, which consists in the exchange 
of services, products, or ideas by men with their 
fellow men. As men are more and more en- 
abled to associate, commerce increases, but the 
power of trade declines ; the growth of the one 
being here, as in the case of utility and value, 
in the inverse ratio of the other. Money is re- 
girded as the great instrument of association, 
power growing everywhere with increase in 
the ability to couruand the services of the 
precious metals. Price is the value of a com- 
modity as measured by money. Prices of 
land, labor, and all raw materials tend to rise 
with every increase in the power of associa- 
tion, that increase being attended by decline 
in the prices of finished commodities. They 



tend therefore to approximate, and it is in the 
closeness of that approximation that Carey 
finds the highest evidence of advancing civili- 
zation. In his opinion trade appears first, to 
be followed by manufactures; and it is not 
until the latter have been developed, and a 
market has been thus made in the neighbor- 
hood of the farm, that any real agriculture 
makes its appearance. The more complete the 
development of diversified industries, including 
agriculture, the greater is the tendency toward 
an influx of the precious metals, which like 
other raw materials tend always toward those 
places at which finished commodities are cheap- 
est. Circulating notes diminish the value of 
the precious metals, but increase their utilit.y, 
with constant diminution in the rate of inter- 
est, and equally constant increase in the tenden- 
cy toward equality among men, and strength in 
the communities of which they are a part. The 
power of accumulation is in the direct ratio of 
the rapidity of the societary movement. Pow- 
er grows with every increase in the numbers 
that can obtain food from any given space; 
and here we reach the law of population pro- 
pounded by Carey. Agriculture, as has been 
seen, becomes more productive as men are 
more and more enabled to combine. The more 
they can combine, the less is the waste of hu- 
man power in the search for food, and the less 
the muscular effort required for producing any 
given effect; the locomotive of civilized soci- 
ety doing the work that in savage life is done 
by the shoulders of the man, and the great 
steam mill grinding the grain that before had 
required the severest labor. Vegetable food is 
largely substituted for animal food ; the ten- 
dency toward this substitution being always 
greatest in those communities in which grow- 
ing wealth most manifests itself in the clear- 
ing, drainage, and culture of those rich soils 
which, according to Rieardo, are cultivated 
when men are poor, weak, and scattered, but 
which, according to Carey, are last brought 
under human power, their very wealth forbid- 
ding their occupation by the early cultivator. 
The more perfect the development of the la- 
tent powers of the earth, and the greater the 
development of man's peculiar faculties, the 
greater is the competition for the purchase of 
labor, the greater is the freedom of man, the 
more equitable is the distribution pf the prod- 
ucts of labor, and the greater is man's feeling 
of responsibility for his action in the present 
and of hope in the future. The higher that 
feeling, the greater the tendency toward matri- 
mony as affording the means of indulging af- 
fection for wife and children, and the love of 
home. The Malthusian theory Carey holds to 
be irreconcilably inconsistent with the real laws 
of nature as seen in the occupation of the earth, 
and the relative powers of increase in vegeta- 
ble life and in the lower forms of animal life 
and in man. The sphere of action of govern- 
ment in directing the commerce of the state is 
strictly limited to the removal of the obstacles 



POLITICAL ECONOMY 



15 



to perfect combination and association. Real 
freedom of trade consists in the power to main- 
tain direct commerce witli the outside world. 
To reach it there must be a diversity of em- 
ployments, enabling the exporting country to 
send its commodities abroad in a finished 
shape. Centralization, such as is established 
by the British system, is opposed to this, and 
therefore it is that that system is resisted by 
all the advancing communities of the world, 
they being enabled to advance in the precise 
ratio with their power to resist it. Protection 
being the form assumed by that resistance, its 
object may be properly defined as being that 
of establishing perfect freedom of commerce 
among the nations of the world. Societary 
organization furnishes additional evidence of 
the universality of nature's laws, for through- 
out her realms dissimilarity of parts furnishes 
conclusive evidence of the perfection of the 
whole — the highest organization presenting the 
most numerous differences. The higher the 
organization the more complete the subordina- 
tion of parts, and the more harmonious and 
beautiful their interdependence ; and the more 
complete that interdependence the greater the 
individuality of the whole, and the more per- 
fect the power of self-direction. In 1873 Mr. 
Carey published " The Unity of Law as exhib- 
ited in the Relations of Physical, Social, Men- 
tal, and Moral Science." The writers who 
have adopted in whole or in part the doctrines 
of Carey, and have published books or papers 
on the subject, are: in the United States, E. 
Peshine Smith, " A Manual of Political Econo- 
my "(1853); Dr. William Elder, "Questions of 
the Day, Economic and Social " (1870) ; Robert 
Ellis Thompson, " Social Science and Nation- 
al Economy" (1875); in Germany, Prof. Eu- 
gene Duhring of Berlin, Carey'' s Umwiilzung der 
VollcsiDirthschaftslehre iind Socialwissenscliaft 
(1865), Gaintal und Arbeit, neue Anticorten 
avf alte Fragen (1865), Die Verhleinerer Ca- 
reifs und die Krisis der NationaldTconomie 
(1867), KritiscTie GescMchte der NationaldTco- 
nomie und des Socialismvs (1871), and Cursits 
der National- und SocialoTconomie (1873); in 
France, M. de Fontenay, M. Raspail, and M. 
Clapier; in Italy, Signor Ferrara, late min- 
ister of finance and editor of Bihlioteca delV 
eeonomista. — American writers other than those 
already named are Prof. Francis Bowen, Con- 
dy Raguet, Prof. Wayland, Prof. H. Vethake, 
George Opdyke, Prof. Amasa Walker, Prof. 
A. L. Perry, and David A. Wells. Prof. 
Bowen published in 1856 " Principles of Po- 
litical Economy," which was revised and re- 
published in 1870 under the title "American 
Pohtical Economy, including Strictures on the 
Management of the Currency and Finances 
since 1866." He says with much truth : " The 
entire science of English political economy 
may be said to be built upon three leading 
tlieories, that of Adam Smith concerning free 
trade, that of Malthus in regard to population, 
and that of Ricardo in regard to rent." In 



none of these does he agree with the English 
school, although he recognizes that they con- 
tain a mixture of truth and falsehood-. Condy 
Raguet was a decided follower of the English 
school, especially in regard to free trade and 
the theory of money. Profs. Wayland and 
Vethake mainly followed the English writers. 
Mr. Opdyke believes that "free trade, abso- 
lute, unconditional free trade, and direct tax- 
ation, is the true policy of all nations, and of 
each nation regardless of the course pursued 
by all others." He holds that bank deposits 
payable on demand are money, and is opposed 
to paper money made convertible Avith coin, 
but thinks that the government of the United 
States should issue inconvertible paper money 
to the amount of $10 a head of the population, 
which should circulate in common with coin, 
each being equally a legal tender. These views 
were promulgated in 1851 in " A Treatise on 
Political Economy." In 1866 Dr. Amasa Walk- 
er published " The Science of Wealth, a Man- 
ual of Political Economy, embracing the Laws 
of Trade, Currency, and Finance," which has 
been repeatedly revised and republished. Dr. 
Walker is a decided adherent of the views of 
Montesquieu and Hume on money, holds to 
Ricardo's theory of rent, but not to Malthus's 
law of population, and is strongly in favor of 
free trade. Prof. Perry published his " Ele- 
ments of Political Economy " in 1865, and it 
has passed through several editions. He re- 
gards the "word wealth" as "the bane of 
political economy," "the bog whence most of 
the mists have arisen which have beclouded 
the whole subject." He adds that the defini- 
tion given by Archbishop AVhately, "the sci- 
ence of exchange," or " its precise equivalent, 
the science of value, gives a perfectly definite 
field to political economy." Value, he holds, 
"is always and everywhere the relation be- 
tween two services exchanged," while utility he 
regards as the " capacity which anything or any 
service has to gratify any human desire what- 
ever." In regard to Malthus's law of popula- 
tion, he holds " that the alleged laws of nature 
in respect to the increase of population and 
food, which are said to be antagonistic, have 
never yet been proved." In regard to distri- 
bution he says: "I wish at this point to bear 
testimony to his (Carey's) great merit as the 
original discoverer of the beautiful law of dis- 
tribution, in the light of which the future con- 
dition of the laboring classes of all countries, 
if they are only true to themselves, seems 
hopeful and bright." In regard to the occupa- 
tion of the earth and to rent, he takes a middle 
ground between Ricardo and Carey. On the 
subject of money he is a decided follower of 
Locke, Montesquieu, and Hume, and upon this 
and foreign trade is utterly opposed to the 
doctrines of the mercantile school of former 
days and the protectionists or the national 
school of the present. Mr. Wells has princi- 
pally devoted his attention to the subject of 
foreign trade, taritfs, and taxation generally, 



16 



POLITICAL ECONOMY 



and is fully in accord with the English school 
of the present time. — The names and doctrines 
of most of the leading economists of Great 
Britain and the United States, other than those 
who confine themselves to the examination of 
questions of finance and banking, have been 
already mentioned. In this class Henry Dun- 
ning McLeod, Prof. Bonamy Price, R. H. Pat- 
terson, and R. H. Inglis Palgrave now hold a 
prominent position in England. The late Ste- 
phen Oolwell of Philadelphia pubhshed in 1859 
(2d ed., 1860) " The Ways and Means of Pay- 
ment, a full Analysis of the Credit System, 
with its Various Modes of Adjustment," which 
is still the most exhaustive examination of this 
entire field in the English language, giving 
both his own views and those of his prede- 
cessors, and a fuller and more complete state- 
ment of moneys of account than any previous 
writer. — In France, among the more distin- 
guished writers on political economy are Blan- 
qui, Tracy, Louis Say, Droz, Rossi, Cheva- 
lier, Dunoyer, Garnier, Baudrillart, Bastiat, 
Eontenay, Ooquelin, Faucher, Reybaud, and 
"Wolowski. One of the most noted of these 
was Frederic Bastiat, whose woi'ks were pub- 
lished collectively after his death (6 vols., Pa- 
ris, 1855; new ed., 1862). He was a strong par- 
tisan of free trade, and a decided follower of 
Locke, Montesquieu, and Hume in regard to 
money, holding that "it is quite unimportant 
whether there is much or little money in the 
world. If there is much, much will be used ; 
if there is little, little is required; that is all." 
His most important work is his Harmonies 
economiques (1850), maintaining the doctrine 
that "all legitimate interests are harmonious," 
which he sought to demonstrate by doctrines 
greatly resembling Carey's theory of value, 
and the consequent law of distribution, enunci- 
ated in 1837. Speaking of the law of distribu- 
tion, he says : " Thus the great law of capital 
and labor, as regards the distribution of the 
products of their joint labors, is settled. The 
absolute quantity of each is greater, but the 
proportional part of capital constantly dimin- 
ishes, as compared with that of labor." It 
need hardly be added that he took issue with 
the theories of Ricardo and Malthus. M. Michel 
Chevalier has principally devoted himself to 
the questions of policy growing out of inter- 
national trade, and is a thorough partisan of 
free trade, having taken a leading part in the 
reciprocity treaty between Great Britain and 
France in 1860. — Germany has produced many 
works on all branches of the subject. The 
formation of the German Zollverein or customs 
union, establishing entirely free inter-state 
trade among the states composing it, with 
such a policy as should protect their domes- 
tic production from external disturbance, was 
due to no man more than to Friedrich List. 
His " National System of Political Economy " 
(Stuttgart, 1841; English by G. A. Matile, 
Philadelphia, 1856) is built upon observation 
and history. "Nationality," says the English 



translator, "is the ruling idea of the book; 
but with his vigorous mind and clear intelli- 
gence, he enlarges it until it comprehends 
every topic of human welfare." "The Ger- 
man eclectic works," says Colwell, " furnish a 
vast amount of well arranged information, and 
they may always be consulted with advantage. 
We would refer," he adds, "especially to the 
works of Schmalz, Jakob Volgraff, Krause, 
K. H. Rau, Lotz, Hermann, and Schon; but 
there are others of equal merit." To these 
names may be added K. A. Struensee, K. F. 
Nebenius, J, G. Busch, Schonberg, Wappaus, 
Schaffle, Scheel, Hermann, Walcker, and Bren- 
tano. — In Italy much attention has been given 
to political economy from an early period, and 
a collection of Italian economists in 50 vols. 
8vo was pubhshed at Milan in 1803-'16. The 
Biblioteca delV economista^ another collection 
of Italian and foreign writers, edited by Fran- 
cesco Ferrara, professor of political economy 
in the university of Turin, and an adherent to 
the school of Adam Smith, has been for several 
years in course of publication. " In 1764," 
says Say, "Genovesi commenced a public 
course of lectures on political economy from 
the chair founded by the care of the highly 
esteemed and learned Intieri. In consequence 
of his example, other professorships were af- 
terward established at Milan, and more recent- 
ly in most of the universities in Germany and 
Russia." The disciples of the most recent 
school of pohtical economy in Italy treat it 
as a science of observation based on the in- 
vestigation and study of history and actual 
life, and reject the notion that it consists sim- 
ply of deductions from the principle of indi- 
vidual interest. The first number of their 
monthly periodical, entitled Giomale degli 
economisti, appeared in Padua in April, 1875. 
Among the leading members of this school 
are Luzzatti, Lampertico, Fox"ti, and Boccar- 
do. — Among the best books of reference on 
this subject are: "History of Prices, 1793 to 
1856," by Thomas Tooke (6 vols. 8vo, Lon- 
don, 1838-57), which argues strongly against 
the theory of the economists in regard to the 
effect of an increased volume of money on 
prices, as maintained by Locke, Montesquieu, 
and Hume ; " The Literature of Political Econ- 
omy," by J. R. McCulloch (London, 1845); 
Dictionnaire de V economic politique (2 vols. 
8vo, Paris, 1852-'3), a most complete, trust- 
worthy, and valuable work ; Histoire de Veco- 
71 omie politique, by A. Blanqui (4th ed., 2 vols. 
12mo, Paris, 1860), containing a catalogue' rai- 
sonne of political economy, which is full and 
valuable ; " A Dictionary of Political Economy, 
Biographical, Historical, and Practical," by 
Henry Dunning McLeod (vol. i., London, 1868) ; 
" History of Agriculture and Prices in Eng- 
land," by J. E. T. Rogers (2 vols. 8vo, 1866); 
Diihring, Kritisclie OescMchte der Nationalo- 
lionomie und des Socialismus (Berlin, 1871); 
and Roscher, Geschichte der Kationalohono- 
mie in Deutschlund (Munich, 1874). 



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